As the world financial system heads closer to the abyss, global production of the second most important precious metal, silver, continues to deal with serious problems. According to Peru’s Ministry of Energy and Mines, the country’s largest primary silver mine saw its production plummet by 54% in the first quarter of 2019.
The Uchucchacua Mine, run by Buenaventura, is not only the largest primary silver mine in Peru but it is also ranked third in the world. Buenaventura reported that silver output at the Uchucchacua Mine decreased during Q1 2019 due to a contractor strike that lasted 21 days and significant rains. However, silver production at Uchucchacua continued to be weak in April, three months after the strike ended.
Interestingly, silver production at Uchucchacua started to decline in the third and fourth quarters of 2018:
As we can see, Uchucchacua’s silver production fell from 4.3 million ounces (Moz) in Q1 2018, to 3.2 Moz in Q4 2018, and further to 1.99 Moz in Q1 2019. And, if we look at the data put out by the Peru Ministry of Energy and Mines, Uchucchacua’s silver production fell another 20% in April 2019 vs. the same month last year. So, there seems to be more trouble going on at Uchucchacua than a strike and heavy rains.
If the weakness of silver output continues in the Uchucchacua Mine along with other leading silver mines, we could see global silver production decline again this year to below 840 Moz in 2019. According to the 2019 World Silver Survey, world silver production fell to 856 Moz in 2018, down from a peak of 894 Moz in 2015:
I was quite surprised to see how much silver production declined at Uchucchucua as I have been recording data from the mine for several years to calculate my “Top Silver Miners Average Yield” which I posted in a new updated chart in a recent article. The average yield at the top eight primary silver mines fell to a new low of 6.8 oz per ton last year:
I doubt many silver enthusiasts realize how rich the silver ore grades are in the Uchucchacua Mine. In 2018, the Uchucchacua Mine in Peru produced silver at an average yield of 11.1 ounces per ton (oz/t). The Uchucchacua Mine is one of the largest high-grade silver mines in the world. Now, compare the following silver yields from the top five primary silver mines last year:
Top 5 Primary Silver Mines Average Yield 2018(ounce per ton= oz/t)
Uchucchacua = 11.1 oz/t
Dukat Mine = 8.2 oz/t
Saucito Mine = 7.1 oz/t
Fresnillo Mine = 6.2 oz/t
San Julian = 4.2 oz/t
Of the top primary silver mines, by the highest output in 2018, Uchucchucua had the largest yield in the group, much higher than Fresnillo LLC’s two largest operations, the Saucito, and Fresnillo Mines. Here is a chart showing the top eight primary silver mines in the world, according to the data in the 2019 World Silver Survey, (Figures shown in million oz – Moz):
So, the huge decline in Uchucchucua’s silver production is certainly something to keep an eye on as it’s the third-largest primary silver mine in the world. I will be providing updates on the global silver production in the next few weeks from the leading countries as well as the top primary silver mines when Q2 2019 data is released.
About the Author:
Independent researcher Steve St. Angelo started to invest in precious metals in 2002. In 2008, he began researching areas of the gold and silver market that the majority of the precious metal analyst community has left unexplored. These areas include how energy and the falling EROI – Energy Returned On Invested – stand to impact the mining industry, precious metals, paper assets, and the overall economy.